Examining Merger and Acquisition Foreign Direct Investment in the United States : Do High Purchase Prices Drive Low Returns ?

This paper analyzes the prices paid by foreign companies for acquisitions in the United States relative to the price paid by US companies for mergers. The ultimate purpose of this research is to determine if overpayment by foreign companies for M&A foreign direct investment in the United States is responsible for the historically low returns of foreign companies on their direct investments within the US. The data indicate that foreign companies do pay more for US acquisitions, and that this does result in significantly lower returns on M&A investment in the US by foreign companies. I would like to thank my advisor, Dr. John Shoven, for the excellent suggestions, guidance, and resources that he provided throughout this project. In addition, I would like to thank my family and friends for their support and encouragement.